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M a r g i n s s u s t a i n e d l e d b y p r i c e h i k e s …
Asian Paints reported strong Q3FY12 results as net sales witnessed 22%
growth on the back of sustained volume growth in the festive season and
price hikes taken by the company. The EBITDA margin, however,
contracted by 90 bps compare to Q3FY11 but improved 120 bps
compared to Q2FY12. This was mainly on the back of price hikes taken by
the company and better inventory management. The company witnessed
strong growth in the decorative segment and subdued growth in the
automotive paints segment. Simultaneously, the international business
witnessed slower growth due to continued macro political uncertainly in
the Middle Eastern region. Higher EBITDA resulted in 16.6% growth in net
profit.
Standalone performance
On a standalone basis, net sales grew 20.2% to | 2109.5 crore compared
to | 1754.2 crore in Q3FY11. EBITDA margins sustained at 17.1% as the
company has taken judicious price hikes to counter increasing raw
material pressure. Raw materials like titanium dioxide continued to
witness a price rise that resulted in higher raw material cost for the
company. Net profit grew 21.2% to | 250.5 crore led by strong EBITDA.
V a l u a t i o n
At the CMP of | 2818, the stock is trading at 28x and 22x its FY12 and
FY13 estimated EPS of | 101.4 and | 126.6, respectively. We believe the
company would witness slower growth in the next two quarters due to a
slowdown in the housing and automotive sectors. Simultaneously, raw
material cost pressures would results in margins contraction in the
coming quarters. However, we believe the company would be able to
pass on rising costs with a lag effect. We have maintained our BUY rating
and target price of | 3390 on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
M a r g i n s s u s t a i n e d l e d b y p r i c e h i k e s …
Asian Paints reported strong Q3FY12 results as net sales witnessed 22%
growth on the back of sustained volume growth in the festive season and
price hikes taken by the company. The EBITDA margin, however,
contracted by 90 bps compare to Q3FY11 but improved 120 bps
compared to Q2FY12. This was mainly on the back of price hikes taken by
the company and better inventory management. The company witnessed
strong growth in the decorative segment and subdued growth in the
automotive paints segment. Simultaneously, the international business
witnessed slower growth due to continued macro political uncertainly in
the Middle Eastern region. Higher EBITDA resulted in 16.6% growth in net
profit.
Standalone performance
On a standalone basis, net sales grew 20.2% to | 2109.5 crore compared
to | 1754.2 crore in Q3FY11. EBITDA margins sustained at 17.1% as the
company has taken judicious price hikes to counter increasing raw
material pressure. Raw materials like titanium dioxide continued to
witness a price rise that resulted in higher raw material cost for the
company. Net profit grew 21.2% to | 250.5 crore led by strong EBITDA.
V a l u a t i o n
At the CMP of | 2818, the stock is trading at 28x and 22x its FY12 and
FY13 estimated EPS of | 101.4 and | 126.6, respectively. We believe the
company would witness slower growth in the next two quarters due to a
slowdown in the housing and automotive sectors. Simultaneously, raw
material cost pressures would results in margins contraction in the
coming quarters. However, we believe the company would be able to
pass on rising costs with a lag effect. We have maintained our BUY rating
and target price of | 3390 on the stock.
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